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Net Prophet - by Dylan Tweney

April 13, 1998

The secret to Web commerce success

When I mention the importance of distribution on the Web, most people's response is "Huh?" Sometimes they give me a quizzical, pitying look, as if I'd gone off the deep end.

Distribution -- the process of moving products from where they're manufactured to where they're consumed -- seems like such a real-world, unwired concept that it hasn't even crossed most Web folks' radar screens.

But it isn't just a real-world concern. In fact, Web distribution may be the most important, most overlooked success factor for Internet-commerce ventures.

Web distribution 101

What is distribution on the Web? It's getting your electronic products in front of as many potential consumers as possible. A single Web site is a very narrow distribution channel, since it requires customers to visit one particular URL to see your products. If your site is well-known or your market small, that may be all you need.

A significant improvement is operating several Web sites for several different audiences. For example, music retailer N2K has a core music site, Music Boulevard (http://www.musicblvd.com) that functions as a general catalog. But they've also got genre-specific sites, like Classical Insights (http://www.classicalinsights.com) and Rocktropolis (http://www.rocktropolis.com). Although packaged differently, the same CDs often appear on multiple sites -- thus effectively increasing their distribution.

Better still is a full-blown distribution network, whereby your products appear on dozens, if not hundreds, of partners' Web sites. The king of Web distribution is Classifieds2000, whose classified ad network illustrates the power of electronic distribution.

Last week, Excite announced its acquisition of the two-year-old Classifieds2000 for $48 million, which should give you an idea of how valuable that ad network really is.

Positive feedback loop

Classifieds2000 maintains a central classified ad site at http://www.classifieds2000.com, where you can browse or search through 1.5 million classified ads, or you can post an ad of your own. The site lets individuals and companies advertise their computers, cars, jobs, and whatnot to a national audience.

Where this business model really gets its power is through Classifieds2000's partner sites, which present the entire Classifieds2000 database -- or a subset of it -- through an interface tailored to match the hosting site's style. Rather than build their own classified ad services, partner sites simply let Classifieds2000 handle the infrastructure, maintain the database, and take care of distribution.

For example, radio personalities Tom and Ray Magliozzi (better known as "Click and Clack") offer auto classifieds on their Car Talk site, at http://www.cartalk.com. Car Talk site visitors can view classifieds or post their own ads without appearing to leave the Car Talk site -- although Classifieds2000 is actually the source of these ads. In fact, it's the same database of auto classifieds that appears on Classifieds2000's site, on Motor Trend Online, and on the Road & Track site.

Classifieds2000 makes money by selling banner ads and "in-line" commercial ads that appear on the classifieds search results pages. (When I was searching through the used-car database, every fifth line or so offered me alluringly low interest rates for new car loans.) It also charges some of its partners for the classified ad service it provides.

Classifieds2000 boasts more than 100 partners. The result? Partner sites increase the distribution of Classifieds2000's ads, since those ads can get in front of more eyeballs than they could through a single site. And having more partner sites means there are more opportunities for people to post their own ads, which in turn increases the size and value of the classified ad database. The bigger the ad network gets, the more valuable it becomes, and the more potential partners it will attract. It's a positive feedback loop that should be the envy of any Internet entrepreneur.

How did they do it? Classifieds2000 built an infrastructure for their site that makes it very easy to deliver their product (the classified ads database) in formats tailored for each partner site. They aren't taking visitors away from their partners, either, since the classifieds are fully integrated into the partner sites. And Classifieds2000 aggressively pursued distribution partnerships with scores of Web ventures.

Are you building a distribution network for your I-commerce venture? Tell me about it at dylan@infoworld.com.

Dylan Tweney edits InfoWorld's I-commerce and intranet reviews online and in print.

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Copyright © 1999 InfoWorld Media Group Inc.

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